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Branded apparel makers post higher Q2 profit

Although rural economy is in distress, the branded apparel makers posted higher profits in the September quarter. It is a result of the reduced raw material prices and better cost management through closure of unprofitable points of sale.

Although rural economy is in distress, the branded apparel makers posted higher profits in the September quarter. It is a result of the reduced raw material prices and better cost management through closure of unprofitable points of sale.

Kewal Kiran Clothing (KKCL) had reported 10 per cent revenue growth, a positive sign in revival of demand for branded apparel. Its leading ‘Killer’ jean brand saw sales rise 24.2 per cent from a year before; those of its other brand, Easies by Killer, grew 11.4 percent.

Many branded apparel players started with discounts and other promotional offers ahead of the Dussehra and Diwali consumer demand. These lured customers to increase their purchases; seasonal discount offers were also extended beyond the normal one-month period.

S P Apparel reported 133 per cent increase in net profit at Rs 34.8 crore for the quarter from a year before. Net profit at Welspun India jumped 73 per cent to Rs 198.5 crore. Kitex Garments saw 64.4 per cent growth to Rs 36.8 crore; Raymond’s rose 33.5 per cent to Rs 84 crore. Siyaram Silk also reported higher profit.

“The improvement in sales and net profit of branded apparel makers was led primarily by a decline in raw material prices. Prices of all raw materials — cotton, yarn, etc — declined,” said an analyst with a leading equity brokerage.

The benchmark MCX spot cotton (29 mm) price declined 8.5 per cent in the quarter to Rs 19,910 a bale (170 kg), from Rs 21,760 a bale in early July. Cotton prices fell in both October and November, too. Since October, these are down seven per cent, to trade currently at Rs 18,540 a bale. With a fall in export, cotton yarn and manmade fibre prices also declined during the September quarter.

Manmade fibre saw a consecutive month of stabilisation on stable crude oil prices in August. However, there was instability in prices during September with the attack on the Aramco refinery in Saudi Arabia.

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